by Kwon Haeyoung
Published 20 Apr.2022 10:00(KST)
[Asia Economy Washington (USA) = Reporter Kwon Haeyoung] Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), met with Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, and stated that "the downward risks to the global economy are further expanding due to COVID-19 and the war."
According to the Ministry of Economy and Finance on the 20th, Georgieva said this during a meeting with Deputy Prime Minister Hong on the 18th (local time), discussing responses to global economic risks such as the Ukraine war and COVID-19.
Georgieva forecasted, "Although uncertainty is high regarding the ripple effects of the Ukraine war, the decline in Russian imports and worsening economic conditions due to decreased consumer sentiment could act as factors bringing Russia to the negotiating table."
Regarding the Korean economy, she predicted, "Thanks to sound fiscal conditions and excellent fundamentals, as well as the Korean New Deal and proactive macroeconomic policies, the impact (from the war) is relatively limited."
On the 19th, the IMF released its World Economic Outlook, lowering this year's economic growth forecast to 2.5%, down 0.5 percentage points from the previous forecast of 3.0% announced in January. It anticipated a significant slowdown in global economic growth, including South Korea, due to supply chain disruptions and inflation caused by the war.
Deputy Prime Minister Hong stated, "The newly established Resilience and Sustainability Trust (RST) by the IMF is a useful tool to provide liquidity to countries affected by COVID-19 and the war," and added, "We will contribute 900 million Special Drawing Rights (SDR) to the RST, as announced at the G20 Finance Ministers' Meeting in February." He emphasized, "Rapid funding by the IMF is necessary for the smooth operation of the RST."
The RST is a program that supports loans for up to 20 years to about 140 vulnerable countries, including middle-income countries, to address climate change, pandemic response, and other issues. The IMF plans to raise $45 billion in resources.
Georgieva responded, "Korea's leading participation will greatly help the operation of the RST." She also requested Korea's support at the 16th General Quota Review.
Additionally, Deputy Prime Minister Hong attended the 7th Ministerial Meeting of the Coalition of Finance Ministers for Climate Action on the 19th. He stated, "When coordinating various policies internationally to respond to climate change, the different industrial structures of each country must be considered," and added, "Korea will continue to support the green transition of developing countries." He emphasized a policy mix that actively utilizes market mechanisms such as emissions trading systems, while also considering non-price policies like fiscal support and research and development (R&D) policies.
Furthermore, he met with the Indian Finance Minister, the chair country of the G20 next year, to discuss the global economy, major G20 agenda items for next year, and economic cooperation between the two countries. Deputy Prime Minister Hong urged that discussions on intergovernmental policy coordination for global economic recovery next year, the restoration of free trade, and strengthening global supply chains should be concretized.
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